In view of FX Strategists at UOB Group, the upside momentum in Cable could extend to the 1.3400 area in the near term.
Key Quotes
24-hour view: “Expectation for GBP to consolidate was wrong as it surged and broke through the major 1.3280 resistance. GBP extended its gain early this morning as it hit a fresh high of 1.3328. The rally appears to be running ahead of itself and while another push higher to 1.3350 would not be surprising, a sustained move above this level seems unlikely for today (next resistance is at 1.3380). On the downside, we expect 1.3240 to be strong enough to hold any intraday pull-back (minor support is at 1.3270)”.
Next 1-3 weeks: “In last Thursday’s update (05 Jul, spot at 1.3230), we noted the “improved undertone” and held the view that GBP “is ready to test the top of the range at 1.3280″. GBP subsequently took out this level on Friday and extended its gain early this morning as it hit a high of 1.3328 during Sydney hours. The undertone has improved further and while we are not ready to adopt a bullish stance just yet, we expect GBP to stay supported and see chance for further GBP strength to 1.3400. A clear break of this level would open up the way for a test of the major 1.3470/75 level (the peak in June). On the downside, only a move back below the ‘key support’ at 1.3200 would indicate that the current upward pressure has eased”.
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